Typical Benefits of Billing-as-a-Service (BaaS)

There are a number of benefits to using BaaS. Not every insurer will enjoy each benefit. As you're thinking through whether this makes sense for you, this may provide you with a starting point for thinking through your own calculations.

BENEFIT TYPE	BENEFITS
COST REDUCTION	Reduced print, mail, and postage costs, as those are absorbed by the vender. Reduced calls to the call center for billing questions. Some reduction is due to self-service capabilities. Some is because the BaaS provider takes on the calls. Reduction of credit card fees for those insurers that choose this pricing option. Reduced time needed for insurer employees to handle administrative tasks such as payment reconciliation.
ENHANCED CUSTOMER EXPERIENCE	Can implement account billing for customers with multiple policies in force. Expands customer digital self-service capabilities through omnichannel access. Expands payment options to include credit card, social pay, and other newer payment mechanisms. Provides more flexibility to customers by allowing them to easily change bill plans and payment methods as well as access their own history.
ENHANCED AGENT EXPERIENCE	Allows agent self-service by integrating billing and commission information with the current agent portal. Provides online commission statements, reporting tools, and reconciliation tools in lieu of PDFs. Allows agents to easily help policyholders keep their policies in force by providing precancellation/lapse reports or cancellation/lapse hold tools.
IMPROVED COST OF TECHNOLOGY	Can generally provide technology to serve policyholders and agents faster and at a lower cost than a company looking to make these changes itself through their own systems or through a core system provider. The BaaS vendor manages all upgrades if needed. Some are true software-as-a-service (SaaS) solutions, which don't need upgrading at all. Integration with the existing web portal and core policy and/or billing systems is generally provided with no charge.
IMPROVED MARKETING	Allows cross-sell messages to be easily placed on bills. Allows cross-sell messages to be easily placed on the portal or mobile app. Supports targeted reminders and marketing messages to reduce nonpayments or late payments.
SIMPLIFIED SECURITY	Reduces the PCI compliance burden, often providing a more secure solution for the policyholders than what the insurers can deliver. Removes all sensitive payment data from your network. Vendors generally provide multifactor authentication. Vendors focus on complying with PCI-DSS, Nacha, SOC-2, and other relevant regulations.

BaaS isn't the right solution for every insurer, but there are some who find this option to be of high value.

Insurers with older systems: Insurers with older systems may find value in the ability to provide their policyholders with more flexibility. These insurers may want to add account bill, credit card billing, more flexible payment plans, or new ways of delivering the invoice without having to replace their existing systems.
Greenfields: Startup operations usually want to move very quickly and may not want to take the time to implement a new system. As startups, they are often cash constrained and may not want to add on the expense of software or the administrative staff necessary to manage the billing process. Additionally, newer to forward-looking products incubated within these greenfield operations may need unique billing capabilities that the existing billing system doesn't support.
Insurers wanting to implement 100% work from home: During the pandemic, many insurers found they were unable to fully implement work from home, as some employees had to come to the office in order to manage the billing process.
Insurers needing specialized processes: Large customers or brokers often have specialized requirements for reporting or operational processes. These may include a very unique billing flexibility (e.g., irregular installment schedules, pay-as-you-go, or monthly reporting), a tweak to the agency portal (or in some cases a tweak to the customer portal just for clients of those agents), or modified commission reporting.
Insurers looking to reduce costs: BaaS solutions usually result in reduced costs for an insurer. They eliminate costs associated with print/mail, credit card fees, and calls to the call center.
MGAs, Program Administrators and Risk Retention Groups: Outsourcing billing to a third party simplifies the process for these complex billing relationships and keeps costs low.
Insurers looking to enhance the customer experience: Today's customers have high expectations of speed and flexibility when it comes to payments. Insurers looking to quickly meet these expectations are often interested in BaaS due to their ability to provide online tools and new payment mechanisms.